UK government grants English mayors power to impose uncapped tourist tax

Mayors in England will be given the power to impose a new fee on overnight stays, under plans the government confirmed on Wednesday. The levy, dubbed a tourist tax, will be charged as a percentage of the cost of hotels, bed and breakfasts and other accommodation, rather than a flat fee. Local Government Secretary Angela Rayner is expected to set out further details when she meets mayors on Thursday.

The levy will have no upper limit, according to the BBC and The Guardian, although ministers said they expected mayors to set rates at a proportionate level. Mayors will be able to decide how the revenue is invested, with the government suggesting it could go towards high streets, local transport and public spaces. They will also be allowed to offer exemptions, such as for campsites, but will not be able to exempt whole localities within their regions.

Rayner said the measure would give mayors "the choice to raise and reinvest funding where it's needed most". She added: "It'll help support the local services, public spaces and attractions that both residents and visitors rely on, with decisions taken by people who know their area best."

The hospitality industry reacted sharply. UKHospitality chief executive Allen Simpson said the plans put jobs at risk and claimed the levy would add £100 to £120 on average to the cost of a family holiday in England. He told BBC Radio 4's Today programme that local government was struggling for funds and mayors would "pull that lever until it snaps".

Conservative shadow housing secretary David Simmonds said hotels already faced 20% VAT and would now pay VAT on the tourism tax too, calling it a "Labour double whammy". Reform UK leader Nigel Farage said his party's two mayors in Greater Lincolnshire and Hull and East Yorkshire would not introduce the levy, which he branded a "holiday tax".

Several Labour mayors signalled support. Steve Rotheram, mayor of the Liverpool City Region, said a modest levy could raise up to £18m a year for events, culture and infrastructure. The mayors of West Yorkshire, London and the West of England also indicated they would bring in the levy. London's mayor Sir Sadiq Khan called for it to come in sooner rather than later, and his office said any levy would not exceed 5% of accommodation costs.

The policy follows similar schemes in Scotland and Wales. Edinburgh introduced a 5% tourist tax in July, capped at five nights, while Wales is set to introduce a capped levy of £1.30 per person per night from April 2027. Until now, regional mayors in England have not had the power to bring in such fees themselves. The government said it would introduce a bill to Parliament "in due course" to bring in the levy.